Sometimes the cheapest policy is definitely not the best policy. That’s when it isn’t being offered by a reputable life insurance company.
You definitely will want to make sure that the company you bought your insurance from will be around when you die. So it would be a very good idea to only purchase your policy from a company that has been in business for a substantial amount of time. And the company should also have received a high rating from the AM Best Company.
With that being said, let’s take a look at term life insurance. One of the most appealing factors about this type of insurance is that you can protect the ones you love in the event of your death at a very reasonable cost, often just pennies on the dollar.
As a rule of thumb, the younger you are the less you will pay for your policy.
Even though term life insurance policies are the cheapest life insurance policies available, a number of options are available that have a effect on their cost. Here are the major types of term policies that are being sold today: yearly renewable term life insurance, decreasing term life insurance, as well as life insurance that’s available for either a 5 year, 10 year, 15 year, 20 year, 25 year, or 30 year term.
Yearly Renewable Term Life Insurance
This policy is for one year and has an option to renew it for a specific number of years. Anticipate that the premiums will increase every year. These policies are best for people who need life insurance coverage for a very short term because the costs can get astronomical as you get older.
Decreasing Term Life Insurance
The reference to decreasing applies to the face amount of your policy. These policies were originally designed to cover the amount owed on a mortgage if the family breadwinner passed on. This is very cheap life insurance because when the mortgage balance goes down the face amount of the policy goes down with it.
Five to Thirty Year Term Life Insurance
Because the cost of renewing a term life insurance policy will be higher than the original premiums it is generally a good idea to purchase a policy with the longest term available, provided that it fits within your budget.